Indian citizens deposited almost all the currency that was scrapped during demonetisation, shows data released by the Reserve Bank of India as part of its annual report.
According to the report, specified bank notes (SBNs), or notes that were demonetised, worth Rs 15.28 lakh crore had been received as of 30 June 2017. When demonetisation was announced, the currency in circulation stood at Rs 17.97 lakh crore. Around 86 percent of this – or Rs 15.45 lakh crore – was rendered invalid on 8 November 2016.
The RBI, however, said that this data was still provisional.
Till such time these notes are processed by the Reserve Bank for their numerical accuracy and authenticity, only an estimation of SBNs received back is possible. Subject to future corrections based on verification process when completed, the estimated value of SBNs received as on June 30, 2017 is Rs 15.28 lakh crore.RBI’s annual report
Detailing the impact of demonetisation on currency composition, the RBI said that the value of banknotes in circulation declined by 20.2 percent over the year to Rs 13.1 lakh crore as of end-March 2017. The volume of banknotes, however, increased by 11.1 percent, mainly due to higher infusion of banknotes of lower denomination in circulation following demonetisation.
- In value terms, the share of Rs 500 and above banknotes stood at 73.4 percent compared to 86.4 percent before demonetisation
- The share of Rs 2,000 banknotes in the total value of banknotes in circulation was 50.2 percent at end-March 2017
The RBI’s Annual Accounts
The RBI’s balance sheet increased by 1.88 percent in the year ended June 30, 2017, showed the report.
- RBI's income for the year decreased by 23.56 percent
- RBI's expenditure for the year increased by 107.84 percent
- RBI had a surplus of Rs 30,659 crore during the year
The increase on the asset side was due to increase in foreign investments and domestic investments by 2.70 percent and 7.45 percent respectively, and capital contribution to the subsidiaries of the Reserve Bank. On the liability side, the increase was mainly due to increase in deposits by 76.96 percent.
Factors that impacted the RBI’s balance sheet during the year included the need for more intervention due to a surge in liquidity post demonetisation. As deposits came in and liquidity surged, the RBI sucked out this excess liquidity through tools such as reverse repo operations. The central bank pays an interest to banks on the amount that they park with it through such a window.
The RBI also incurred higher costs on printing currency.
Expenditure on currency printing rose to Rs 7,965 crore in 2016-17 compared to Rs 3,420 crore in 2015-16.
(The article was originally published on BloombergQuint)
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